German law limits renewable growth

09 April 2014

A new law approved by the German cabinet aims to keep down the costs and slow down the rate of growth of renewable energy as the country continues with its energy transition.

The Energiewende policy adopted by Germany in 2011 in reaction to the Fukushima nuclear accident in Japan calls for the closure of all of the country's nuclear power plants by 2022, pushing to replace the lost capacity with an increase in renewables.

Court action

Legal challenges by the operators of Germany's remaining nuclear power plants and those already forced to close down continue at both the national and European level, with utilities pressing claims for compensation and in particular suing the government over an ongoing nuclear tax introduced in September 2010, before the turnaround in energy policy.

However, susbsidies aimed at stimulating the growth of renewables have driven up prices of consumer power. residential electricity prices increased 12.5% in 2013 compared with the previous year to some 30 cents per kWh. The new reforms to Germany's law on renewable energy, approved by the country's cabinet, seek to address this by making the expansion of renewables more gradual and predictable, while revising the policy on financial support.

"Corridors" for the expansion rates of different renewable energies will control the annual rate of growth so that by 2025 renewables will provide 40-45% of the total electricity, rising to 55-60% by 2035. The new provisions will apply to all plants going online as of 1 August.

The law also sets out a new approach to the average support that new renewable plants can expect to receive. The subsidies received by new wind, biomass and photovoltaic plants average out at 12 cents per kWh but vary according to the individual technology, with onshore wind plants receiving the lowest ranging from 8.9 cents per kWh for onshore wind to 19.4 cents per kWh for offshore wind.

To further governmental aims to gradually reduce subsidies and integrate green power into the market, the law also obligates new renewable plants to market their power directly in competition with conventional power generators. Although initially this will only affect plants with an output of 500 kW or more, by mid-2017 the obligation will extend to all plants with an output over 100 kW.

Introducing the new law, German economics minister Sigmar Gabriel said that the reforms aimed to make the expansion of renewable energy more predictable, without any sudden increases in costs - although he said the government could not "promise" cheaper electricity as a result.

Meanwhile, legal challenges by the operators of Germany's remaining nuclear power plants and those already forced to close down continue at both the national and European level, with utilities pressing claims for compensation and in particular suing the government over an ongoing nuclear tax introduced in September 2010, before the turnaround in energy policy.